In the U.S., programmatic budgets account for about 20% of digital spending, but programmatic growth is slowing because of concerns over supply chain integrity and brand safety.

U.S. unemployment is 4.4% and falling; real wages are growing 2.5% and rising; and consumer confidence is at a 17-year high, though consumer spending growth remains sober at 2.7% in 2017 and 2.3% predicted for 2018, says GroupM, pointing to some of the economic underpinnings for its forecast.

“Growth is wide with more people working, but shallow with wages growing slowly. If the global economy sustains its rising demand for labor, it may reveal a widening skills gap. Then, competition should raise wages, spurring investment in productivity and helping inflation to finally surpass central bank targets,” said Adam Smith, Futures Director at GroupM.

On a global basis, GroupM sees advertising investments rising 4.3%, or $23 billion, in $558 billion in 2018, after a 3.1% increase in 2017.

“For every dollar that migrates from legacy to digital media, GroupM estimates 25 cents goes to technology and data. This is not counted in a now antiquated concept of working media investment,” said Smith. “We also know that in periods of low inflation, marketing money gets reallocated to promotion; this is a cyclical challenge, not a structural one.”

Global investment in TV advertising will grow 2.2% in 2018, compared to 0.4% growth in 2017, but TV lost a share point in 2017 and will lose another in 2018, hurt by trends in China, where TV is restricted by the government.

“Time spent with TV content remains healthy, but monetizing those hours gets harder as audiences diffuse across platforms more quickly than the industry can create measurement solutions,” GroupM says.

Digital investment is expected to grow 11.3% in 2018, following 11.5% growth in 2017.

GroupM believes Google and Facebook will account for 84% of all digital investment in 2017.

“2017 is a challenging year. Brands are operating in hyper-competitive and low growth markets, challenged to deliver in the near-term. Legacy media continue to be challenged by audience fragmentation and competition from the dominant digital players, and those giants have grappled with their own far-reaching success as consumers misuse their user-generated platforms,” said GroupM Global CEO Kelly Clark. “Sitting between strained clients and stressed media partners, agencies understandably also saw challenges in 2017, but it would have been much worse for our clients had they not had us to help navigate marketplace dynamics. We believe marketers have an enduring need for objective partners who can operate across the whole media landscape to develop the most integrated campaigns, as well as to help shape standards, measurement and integrity.”